age pension, retirement and a trip to italy

How Don afforded his dream trip

Are you also dreaming of a big trip in 2024? So many of us are and Christmas is often when we have the time to check out airfares, accommodation and take the plunge.

But how do you know if you can afford a big trip? How do you gain the confidence to spend when it’s difficult to judge how long your money will last?

These were the questions posed by Don when he caught up with Nicole. He was both pleased and surprised to learn that he could afford to indulge his dreams of an Italian adventure next year. Don was widowed two years ago and now feels ready to get back out into the world. He’s hoping a group tour in northern Italy will give him a very social adventure to look forward to. Here’s how he and Nicole approached this challenge and how he was able to reach a successful financial outcome.

Many people are under-spending in retirement, sacrificing their dreams and their lifestyle, only to end up sitting on a large nest egg wishing that they’d gone hiking in the Dolomites when they had the chance. A lot of this has to do with our mindset. Changing from a saving mindset (that has been ingrained in us since we were young), to a spending mindset is a much bigger leap than most people anticipate. But this change does occur as we move into retirement. So how can you become more confident in your decision-making? 

One of the most common questions our advisers are asked is, ‘How much will be enough for my retirement needs? 

Nicole has more than 20 years’ experience in financial services. But she told us that she has never met two clients in the same situation. Everyone has a different mix of:

  • retirement age 
  • super balance 
  • housing situation
  • cost of living 
  • retirement travel dreams 
  • hobbies, 
  • kids they want to help, 
  • potential inheritance pipeline, and so on, and so on. 

Every one of these considerations is another aspect that can influence retirement affordability. Retirement calculations are complex, so let’s look at the best starting point if you want to head off to Italy without the concern that you’ll end up having to start a new Uber driving career at 87:

Step one: Know where your money goes. 

Perhaps the most decisive factor when you want to project if you can retire is working out how much money you will need to spend to be comfortable. Of course, everyone has a different idea of what ‘comfortable’ is, so despite all the figures you see floating around online, the success of your retirement depends on working this out for yourself. Remember, this is not a budget! It is a realistic plan and costing of the retirement lifestyle you would like to maintain. has a simple but effective planning tool if you want some help to get started with this projection.

Step two: How much Age Pension are you likely to get? 

No idea where to start with this? Why not use our free Age Pension Eligibility Calculator so that you have some indication of the amount of income for which you might be eligible. Sometimes when we think about our expenses, we worry that our retirement savings will run out too quickly. But it’s worth remembering that the vast majority of older Australians receive Age Pension benefits, if not now, then in the future. When this happens you are using less of your own savings, and more of the Government’s money, to support yourself. This means that your money might last longer than you think. It is common (and in fact completely normal) that your super balance reduces a little faster in the first years of retirement. This usually happens when you are active and receiving less Age Pension, but in most cases this rate slows down over time and remains sustainable. 

Step three: So how long will Don’s money actually last?

And how many years will he lose if he books that trip to Italy?

This calculation is a little trickier. The above-mentioned Age Pension Eligibility Calculator provides some idea of what you could be eligible for in the short term. Over time, however, as your assets may decrease, so the Age Pension increases. So assets go down, but you’re now getting more Age Pension, so you don’t need to draw as much from your super. At this point in your calculations, you may need a little more help.

Some superannuation providers have basic calculators available online, but they often only have the capacity to look at how long money might last drawing the same amount every year through retirement, or if you only ever draw the ‘minimum’ that you have to. This is never the whole picture and may result in living well below your preferences and your means.  

Retirement Essentials offers a Retirement Forecaster consultation during which we consider your level of spending, your assets, your retirement dreams… and we can run a scenario of Italy versus not Italy. It’s common for customers to be surprised by the outcome.

Buongiorno Roma!

Here’s what happened when Nicole worked with Don on his 2024 travel plans.

The group tour he has in mind will cost about $5500, his airfares are $5200 and his extra accommodation and expenses will be about $4,000. All up he believes that he will need to spend $15,000 on his Italian adventure. 

Don currently has a super balance of  $450,000 and is receiving a part Age Pension. After he has paid for his holiday, his Age Pension will increase by $45 per fortnight or $1170 per year. Using the Retirement Essentials Safe Spending Simulator, Nicole was able to show Don that this made a negligible difference with his retirement savings ‘running out’ at age 93.5 instead of 94. 

Needless to say this was good news in Don’s opinion and he was genuinely excited to learn that his travel plans are totally doable.

If you have been reluctant to retire and make travel plans because you’re concerned you can’t afford it, make an appointment to work through your retirement options with one of our financial advisers. They can give you confidence moving forward that you have based your decisions on facts, and not fear. And, most importantly, how much you can safely spend.
Where would you like to travel in 2024? We’d love to hear your plans. And don’t forget to keep an eye on your inbox over the break for our first ever Retirement Essentials Travel 2024 update.